Chubu Electric proposes 20% pay cut to pave way for rate hike

NAGOYA – Chubu Electric Power Co. called on its labor union Tuesday to accept a 20 percent cut, excluding overtime, in the year starting next April.

The steep salary cut is designed to win public understanding for when the company seeks government approval for a full-fledged increase in electricity charges for household users beginning in April.

As part of the pay cut, the monthly basic salary would be reduced by 5 percent, the first wage cut since the firm was launched in 1951.

Summer bonuses would be halved from last year to the equivalent of one month of basic salary. Winter bonus levels have yet to be determined.

The company will carry out an even steeper pay cut for managers.

According to Chubu Electric Power’s latest annual financial report, the average annual pay for employees stood at ¥8.01 million, including bonuses and overtime.

Chubu Electric has had to deal with soaring fuel costs for thermal power plants since it halted its Hamaoka nuclear power station in Omaezaki, Shizuoka Prefecture, in May 2011 at the request of the government.

Fuel costs for the year ending next March are expected to total ¥1.25 trillion, 1.8 times the level prior to the suspension of the Hamaoka plant. The company may incur a third consecutive annual net loss this year.

It has set a target of cutting costs by ¥130 billion, mainly through pay cuts for executives, bonus reductions for employees in general and a review of planned construction projects. It has also decided to skip dividend payments for this year.